IC Insights Ranks Top 25 2006 Semiconductor Suppliers
Hynix, Sony, Qimonda, Broadcom, and Elpida post greater than 35% sales increases

IC Insights today released its ranking of the top 25 worldwide semiconductor (ICs and OSDs--- optoelectronics, sensors, and discretes) sales leaders for 2006 (Figure 1). This list is a portion of the top 50-semiconductor supplier ranking that will be released in the upcoming March Update to The McClean Report. For the top 25 suppliers, it was clearly a year of the haves versus the have-nots. Although six of the twenty-five suppliers posted revenue spikes of greater than 35% in 2006, over one-third of the companies (nine) registered below-average sales growth (i.e., less than 9%) last year.

The strength in the DRAM market, which increased 32% in 2006, spurred a surge in sales at Hynix, Qimonda, and Elpida. Meanwhile, Sony received a big boost in its 2006 semiconductor sales due to large gains in internal transfer revenue from its new Playstation 3 game console ramp-up.

AMD's 44% jump in 2006 sales was driven by its noticeable microprocessor marketshare increase (though AMD is still about one-sixth the size of Intel) as well as its second-half 2006 acquisition of ATI. IC Insights believes that when including full-year sales for the former ATI business, AMD will move into the top 10 ranking in 2007. Fabless supplier Broadcom continues to ride the communications wave with a strong presence in the networking, broadband, and mobile and wireless product segments. While Broadcom's 37% 2006 growth rate is impressive, even more impressive is the company's 2001-2006 average annual growth rate of 31%!

With nine suppliers headquartered in the U.S., eight in Japan, four in Europe, two in Taiwan, and two in South Korea, the list of major semiconductor suppliers contains a broad representation of geographic regions. The top 25 listing also includes two pure-play foundries (TSMC and UMC) and three fabless companies (Qualcomm, Broadcom, and Nvidia). Essentially all of the top 25 semiconductor companies had semiconductor sales of at least $3 billion in 2006, about the same dollar amount needed to construct a high-volume 300mm wafer fabrication facility.

Figure 1

Despite a 9% decline in sales in 2006, Intel easily maintained its hold on the number one spot, having about 64% greater semiconductor sales than second-place Samsung (down from about double Samsung's sales in 2005). After growing at about twice the industry rate in 2005, Intel posted the biggest sales decline of any top-25 ranked company in 2006. Because of Intel's big decline in sales, in total, the top 10 semiconductor companies showed only a 6% sales increase in 2006, while the top 25 posted an 10% jump, one point above industry-average growth.

It should be noted that six of the nine top-25 suppliers that lost positions in the 2006 ranking were Japanese companies (the other companies that slipped in the rankings were NXP, Micron, and Infineon).

Infineon and its spin-off Qimonda, each had over $5 billion in sales in 2006. Combined, the companies' sales would have been $10.5 billion, which would have been large enough for it to be ranked as the fourth largest semiconductor supplier in the world in 2006. In fact, with Infineon currently holding about 85% of the stock in Qimonda, there are some that believe the two companies' sales figures should still be combined.

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